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Forex: EUR/JPY rises to 130.00 handle on US session

FXstreet.com (Barcelona) - While the USD/JPY made a quick rally to 90.00 area, staying sideways since then, and the EUR/USD plunged to 1.3034 before pulling back to its highs at 1.3150, the EUR/JPY reaction to the US nonfarm payrolls during the US session has been more of a steady rise towards the 130.00 mark. The pair jumped 100 pips to 129.50 first, and then extended higher to 130.34 high slowly. The market is currently +1.50% up on the day, just below the 130.00 handle.

The US nonfarm payrolls surprised investors as the March weakness was revised higher by 50K, from 88K to 138K. Also, April data came in above market consensus, at 165K instead of 145K.

Market consensus was already suggesting a contraction, but by -2.6% in March, not what actual Factory Orders data showed: -4.0%. Also, the February figure was revised lower, from -3.0% to -1.9%. The non-manufacturing PMI by ISM fell from 54.5 to 53.1 in April, disappointing investors that were expecting a figure around 54.0.

The European Commission granted a 2-year extension to achieve the deficit deadlines in Spain and France, placing it in 2016 and 2015 respectively.

“Above 130 will target the 131.12 recent high. Our slightly longer term target is 136.71, the upside measurement from a wedge”, wrote Commerzbank analyst Karen Jones.

Forex Flash: ECB to contemplate negative rates? – BMO Capital Markets

According to Stephen Gallo at BMO Capital Markets, “Investors are not entirely sure that Mario Draghi’s comment, suggesting that the ECB is ready to cut the deposit rate to negative was an explicit attempt to weaken the EUR.” Going negative on key rates is an enormous decision, especially for the ECB, as such a move attempts to force an unnatural, behavioural shift in money market conditions and the banking system, leaving the risk that the two become even more dysfunctional over time.
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Forex Flash: USD/CAD to get squeezed back up to upper 1.02s near-term – TD Securities

Having pushed a little higher from the mid-week low around 1.0050 and picked up more ground late yesterday above key short-term resistance at 1.0100, TD Securities analysts believe the 1.0080/90 area should remain good support for the market in the near-term, while weakness below here would suggest the short-term potential at least for further losses. “We rather prefer to see downside potential from here as limited due to the broader (daily, see below) patterns looking more constructive. Intraday, we see support at 1.0080/90 and 1.0050. Resistance is 1.0140/50”, wrote analysts Shaun Osborne and Greg Moore, adding that pattern-wise, the daily USD/CAD picture looks positive. “Tentative channel support seems to have held the market and the daily candlestick pattern is bullish (“morning star”), notwithstanding the modest push back against the rebound seen so far today”, they said, pointing to key support on a daily basis at 1.0050/60 and a modest squeeze back up to upper 1.02s near-term.
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